Laws differ in various countries due to different views of the public interest. Countries with low tax rates are often countries with comparatively fewer state-sponsored social benefits. Both the wording and substance of taxation laws will differ accordingly. Contract laws may differ accordingly. Laws as to unjust enrichment may differ accordingly.
One expects differences in laws across countries, based on differing views of government as to where law ends. Yet for some reason, with accounting standards, one assumes a degree of universal similarity as to government views with respect to the public interest.
Some would argue that a “global language of accounting” is both an impossible and an undesirable ideation of similarities of government visions.
Working in the public interest
First, what is the public interest aspect of accounting standards? We define our mission as ‘to develop International Financial Reporting Standards that bring transparency, accountability and efficiency to financial markets around the world.’ While not quite the Holy Trinity, these three are certainly desirable characteristics of financial markets.
Our Standards bring transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions. They increase the accountability of financial markets by reducing the information gap between providers of capital and the people to whom they have entrusted their money. This is in essence the Stewardship principle, which is so important to our work.
And IFRS Standards contribute to economic efficiency by helping market participants to identify opportunities and risks across the world, thus improving capital allocation. The internet can help business thrive because it is based on one set of worldwide standards. It is the same in the world of financial reporting.
And so our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy. That is why the Financial Stability Board has designated IFRS as one of 12 key standards for creating sound financial systems.
And where what is a “sound financial system” is matter of perceptions of the public interest by legislators…